Fraud Chronicles roundup – Feb 19, 2014

Bitcoin Fraud Warning

Israel’s central bank is warning against virtual currencies such as Bitcoin, claiming they are high risk for fraud and misuse. The Bank points out that virtual currencies are not legal tender in Israel. The Israeli Bitcoin association acknowledges some of the risks, but points out that virtual currencies are a useful alternative to unstable currencies (Feb 19, Bloomberg.com)

Bernard Madoff’s Former Aides on Trial

Fraud Case Jury to View Madoff Video. Over prosecution objections, U.S. District Judge Laura Taylor Swain has ruled in favor of a defense request for the jury in the Madoff ex-employees trial to have the opportunity to view a 2007 video of Bernard Madoff. In the video Madoff addresses a New York City conference on “The Future of the Stock Market”, arguing against increased securities regulations. In the video Madoff, who had secretly been running a Ponzi scheme for decades, said it was “impossible for [securities] violation to go undetected, certainly not for a considerable period of time.” (14 Feb 2014, USA Today)

Former Madoff operations manager Daniel Bonventre took the stand in his own defense Tuesday, changing his previous decision not to testify. The 67 year old defendant described Madoff as a generous, philanthropic man who could turn into a bully in an instant, and often said he was “surrounded by idiots and assassins.” Bonventre worked in the legitimate, broker dealer part of Madoff’s empire and denies knowledge of the scam prior to Madoff’s 2008 confession. Prosecutors will cross-examine Bonventre later this week. (18 Feb 2014, USA Today)

Other Fraud News

Credit Suisse Waits for $11 Billion Answer in N.Y. Fraud.Credit Suisse and New York Attorney General Schneiderman are waiting for a Manhattan court to rule on Credit Suisse’s application for dismissal of charges that the Swiss bank misrepresented mortgage-backed securities risk. The court’s ruling hinges on whether the time has run out for the case. (18 Feb 2014, Bloomberg.com)

Do you have a news, court or regulatory body information on an interesting fraud case? Comment on this posting or Tweet @fighting_fraud to share your Web links of publicly available fraud news and case information.

Vanessa G. Oltmann
Education and integrity – the best weapons against fraud and corruption

24 thoughts on “Fraud Chronicles roundup – Feb 19, 2014”

Dara Wilder, was the kingpin of a fraudulent scheme through the Scientific Research Tax Credit (“SRTC”) program. It is alleged that the accused claimed to have incurred expenses for research far in excess of the amount of research actually done.

In this case, John Paterson falsified mining data on a site known as the Boka Project in China, and as a result inflated share prices of Southwestern Resources Corporation which ended in a loss of over 250 million dollars drastically affecting the corporation and the Canadian market.

Bradley Oneil, owner/operator of International Tax Refund Services Inc. (ITRS) was convicted of Fraud over $5000 for failing to pass on customers’ refunds in an amount exceeding $3.6 million. More details can be found here: http://canlii.ca/t/2f788. Oneil’s sentencing appeal to the Alberta Court of Appeal was dismissed: http://canlii.ca/t/fxqt3.

John Kelly was convicted of fraud over $5000 and sentenced to 24 months in prison for his fraud against Big K fuels Incorporated. Mr. Kelly defrauded the company that he was one third owner in by forging signatures, misappropriating funds, and charging personal expenses on the company card. Mr. Kelly defrauded big K fuels out of over $700,000 of misappropriated funds.

Mr. Saturday Oton ran a bookkeeping company where he made false charitable donation claims on his client’s tax returns. These fraudulent claims resulted in $129,381 of refunds paid out by the federal government. Mr. Oton was found guilty of fraud over $5,000 and sentenced to 6 months in prison.

$17 million tax fraud where the tax preparer altered clients’ tax returns by inflating charitable donations and then pocked the difference of the increased tax refunds. The fraudster fled Canada but was tried and found guilty in absentia.

Mark Johnston managed to defraud a hotel (Yonge Suites Hotel) in Ontario of $22,294.58. Mr. Johnston stayed for 56 days with a full intention of not paying his hotel bill. During his stay he requested changes and amassed charges to his room. When he was done, he provided a forged cheque for $20,168.43.

Mr. Kindrachuk sued his mortgage specialists Mr. Cazabon that uncovered his fraudulent acts while Mr. Kindrachuk was accused of being a “straw buyer”, where he obtained a mortgage to purchase a house in which he had no intentions on occupying nor occupying.

Mr. Oguamanam was convicted for his role in a lottery fraud, after a fannypack containing a number of fake i.d.’s was discovered, which he used to deposit money from the fraud into bank accounts he had set up for the purpose of moving the money.

Captain Thornton pled guilty to three charges of defrauding the University of Western Ontario. He defrauded the University of Western Ontario on two occasions in 2001 and 2002 of the amounts of $5,000 and $7,000.

Thomas Palantzas, a bank manager for the Toronto Dominion Bank Financial Group in Toronto from May 1982 to March 2004, he defrauded the bank of approximately $819,000 by opening 37 loan accounts in the name of 22 innocent people. The fraud came to light as people who’s names were used in the loan application began to receive calls from the banks collections department for loans they had no knowledge of.
Palantzas was sentenced to a period of incarceration of four years and a restitution order under s. 738 of the Code in the amount of $819,000 was made in favour of the bank (TD).

Many people in BC will remember the media attention “Railgate” got when the police raided the houses of politicians in relation to the sale of BC Rail; the 2003 trial of Udhe Singh (Dave) Basi, Bobby Singh Virk and Aneal Basi bring to light some of the details of corruption and money laundering charges that were laid.